Gen Z Is "Out-Earning" Millennials. There's Just One Catch...
It's Their ______s' Money.
I was recently in a discussion with a friend about the slow, visible decline of the UK. We were talking about stagnant growth and the slow decline in living standards for the younger people in our country. But right in the middle of our back-and-forth, he threw a completely counterintuitive data point at me that put me straight on the defense.
I sat there wondering about it immediately. Could that really be true? Could a generation that seems structurally locked out of basic milestones like homeownership and independent living actually be doing better than we were at their age?
A quick read showed that The Guardian had faithfully reported the headline findings of a brand-new briefing by the Resolution Foundation. “At the age of 24, those born in the early 2000s are also earning more than any other generation going back to those born in the 1950s, according to the study.”
That sounds...incredible. Was I wrong all this time? Maybe we’re doing better than I thought? As is almost always the case, when you peer behind the curtain you find the Wizard of Oz. The claim doesn’t even nearly stand up to scrutiny, and instead, it’s another node in the omnipresent distortion matrix.
Using an Iron Man Prompt™ I’ve been developing, I had some AI agents parse through the underlying methodology with a fine tooth comb. What I found is another example of the institutional distortion field bending our reality because of misaligned institutional incentives. So what did these guys do? Let’s get into it.
The Play-by-Play Distortions
When you open the actual Resolution Foundation Report, the narrative of a generational economic “mini-rebound” quickly begins to fray under the weight of its own data design. To generate their optimistic headline, the authors rely on deliberate statistical choices that camouflage the reality of young adults.
1. Absorbing the Parents’ Wealth
The report’s primary metric for tracking standard of living is “equivalised disposable household income.” The critical structural flaw with this metric is that it treats a multi-generational household as a single, harmonious unit where everyone pools their cash evenly. The report states:
“That measure... gives each person the equivalised total income of the household in which they live. This is a good measure of an individual’s living standards if people in a household share their resources... but it is less likely to be the case in multi-benefit unit households, including cases where individuals live as housemates, or when adult children live with parents.”
But it’s worse than that, because an unprecedented 63% of young people aged 20–24 are still living in their childhood bedrooms, their recorded “household income” is heavily absorbing the peak-career salaries, pensions, and asset values of their parents! The authors themselves admit the scale of this distortion later in the text:
“For those aged 20-24, just 10 per cent of household income progress comes from that person’s benefit unit’s income, with 86 per cent coming from others in the household.”
In other words, 86% of the apparent financial progress celebrated by The Guardian in their headline isn’t Gen Z thriving, it’s their parents growing assets keeping them afloat because they’re unable to afford to move out. #Progress!
2. Systematic Erasor of Rent
Not only does the ‘uptick’ include the wage and asset growth of parents, but by ignoring the distorting nature of the “Hotel of Mum and Dad,” the study’s primary data models systematically reduce the impact of housing costs. If you don’t leave home, you don’t pay market rent, which means your disposable income looks artificially inflated compared to the historical cohorts who could afford to move out!
The report explicitly details this massive unmeasured living subsidy:
“Our data doesn’t tell us exactly how much housing costs are paid by the young people who live with their parents, but many parents don’t charge their children much or any rent: a study by Compare the Market of 1,000 parents whose adult children live with them showed that 55 per cent of parents charge their adult children some rent to live at home, but this is only £110 a month on average.”
Meanwhile, the data notes that independent young adults renting privately are losing a median 32% of their gross income directly to landlords. By measuring pooled household income, across a generation of young people anchored at home, the metric hides the reality of a brutal rental market, making structural gridlock look like a statistical victory.
3. The Workforce Survivor Bias
Then there is the labor market data. The headline points to rising median weekly earnings to suggest the UK job market is in “benign conditions” for youth. But wage surveys like the Annual Survey of Hours and Earnings only sample people who are actively employed.
The report casually drops a devastating counter-statistic that invalidates the broader trend:
“The UK has a resurgent NEETs situation - people not in employment, education or training - with over a million young adults now in this category.”
When over a million of the most economically vulnerable, lower-skilled young adults drop out of the workforce entirely, they simply don’t turn up in the annual wage datasets! The median wage of working Gen Z adults goes up, because the bottom of the stack was never included in the denominator. It’s survivor bias masked as progress.
An extreme analogy can clarify the distortion here. Imagine we’re measuring the overall health of Gen-Z and we say “yeah they’re doing pretty well actually”, but in calculating that, we simply excluded every Gen-Z person who had dropped dead. You could have a full tilt war going on, with millions dead, and your decision to ‘exclude the dead’ from your dataset would nicely mask the true decline in that generations health!
Why Do They Do This?!
It is easy to look at this and feel a sense of profound cynicism. Why would an organization filled with smart, well-meaning economists publish a model that relies on such transparently flawed assumptions?
This isn’t ‘bad’ science (per se), these think tanks are well aware of everything I’ve just told you. They do it because they are playing the specific, calculated game of the Think-Tank Attention Economy.
Think tanks like the Resolution Foundation don’t exist to publish dry, unread academic papers; they exist to actively shift government policy and shape public discourse. But the political landscape is completely deaf to status-quo updates. If a think tank publishes a headline saying, “Young people are still structurally locked out of the economy in predictable ways,” a newspaper editor will bury it on page twenty. To command the news cycle, you need a “Hook and Pivot” strategy.
First, you manipulate the survey parameters until you find a counterintuitive, attention-grabbing headline. “If we exclude the jobless, minimize rent and housing costs, and subsize earnings with parental asset growth then we can say ”Gen Z is out-earning Millennials!”
This is the hook designed specifically for mainstream journalists to run with. In your “perfect world” imagined strategy, once the mainstream media gives you the microphone, you execute the pivot and plug your pre-packaged policy solutions. But in reality, all that sticks around in our culture are the distortions you conjured to build the attention you needed for your intended goal.
Sure enough, if you read to the end of this report, the optimistic wage narrative is abruptly discarded to lobby the government for two highly specific things: a state-backed “Starter Deposit scheme” and an explicit plea for the government to “pause its convergence to the adult minimum wage” out of fear that rising labor costs are driving the NEET crisis.
The irony? According to their own report, most of the uptick in Gen-Z’s earnings was actually driven by minimum wage. But as they explained, this only looks at people who actually got a job. If higher minimum wages lead to more unemployment, their statistical analysis wouldn’t alert you to that. They’re arguing, quietly, that the higher minimum wage looks great for those who got it, but it could be locking people out of employment. Ergo, perhaps pause on developing the minimum wage for adults.
In short, the attention economy incentivises institutions to contort reality. These think tanks are bound to the funding cycles of research councils and charitable trusts. To secure the next multi-million-pound grant, they have to prove their research has “impact.” In the policy ecosystem, impact is measured by public engagement and media footprint. A viral, controversial headline that sets off an intergenerational debate across social media is exactly what they need to justify their institutional budget.
Chipping Away at Reality
You are the collateral damage of that requirement because the think-tanks know the incentives of the newspapers, too. I know all too well that publications need quick stories that get clicks, because you’re reading one right now!* The Guardian need the same, and so it didn’t interrogate the report at all, it just ran a story which will now pollute and distort dozens of other debates about the progress the country has made since 2008. Here at The Digger, as you can see, we do things a little differently...
How often do you think these distorting incentive structures arise? Journalists working under brutal daily deadlines do not have the time, the statistical training, or the institutional incentive to read page 18 of a technical economic briefing. The think tanks know it, so they are presented with a slick, embargoed press release of a perfect “man bites dog” story on a silver platter. They copy and paste the headline findings and move on to their next task.
But every time this happens — every time structural incentives mean major news outlet runs an inverted headline — our collective sense of reality is distorted one more time.
A Gen Z reader stuck in their parents’ house at 26, completely unable to afford a one-bedroom flat or build an independent life, looks at The Guardian and reads that their generation is experiencing a “financial rebound”. They don’t see the technical footnotes explaining that this number now includes their dad’s salary because they can’t afford to move out. They just assume that the system is functioning, and that they are the individual failure.
I suspect that distortions like this happen all the time. Shall we do this again?
* by my standards this is a very quick story, but as you can see, it’s not a story you can expect to find in the mainstream press for the reasons I explained. If you value this kind of journalism, please support it with a subscription. Shares, likes, comments are always appreciated because the audience this gets is the audience you generate.